discovery of changes to the transaction that have not even been finalized yet); (3) to conduct

expert discovery; and (4) to engage in pretrial motions practice to narrow and clarify issues.

Because this case will affect tens of millions of American consumers and billions of dollars of

commerce, there is every reason to fully develop the issues for the Court, on an aggressive, but

reasonable, schedule that reflects the importance of the matter.

III. Defendants’ Arguments Do Not Justify an Extraordinarily Abbreviated Schedule

Defendants, we understand, will claim that deadlines in their own merger agreement

justify asking the Court to resolve this Complaint on the merits with an extraordinarily

abbreviated schedule for a deal of this significance. A review of Defendants’ claims shows that

they fall far short.

A. Self-Created Deadline

Defendants’ claim of urgency should be disregarded because it is self-created.

Defendants claim that particular terms of the transaction, which Defendants themselves

negotiated, should cause the court to abbreviate its consideration of the merger. The merger

contract provides substantial incentives for termination -- but does not require it -- within the

period January 7-20, 2003.

But Defendants’ self-created deadline can be changed with the stroke of a pen. If it is in

Defendants’ interest to extend the deadline, it will be extended. Faced with similar arguments

that a transaction would be abandoned, the Court of Appeals for this Circuit, in FTC v. H.J.

Heinz Co.1 said:

[A]lthough the appellees state that if an injunction pending appeal is granted they may abandon the merger, they do not unequivocally state that they will do so. . . . Moreover, even if the current merger plans were abandoned, the evidence does not establish that the efficiencies the appellees urge could not be reclaimed by a renewed transaction following success on appeal.

Id. at *2. If the benefits of the transaction were actually as substantial as Defendants claim, it

would obviously be in their interest to agree to such an extension. Rather than work out an

amendment to extend their deal for a reasonable period of time, Defendants have chosen to focus

on negotiating a separate “remedy” deal with a third party that they expect to finalize and litigate

in the space of a few weeks. Defendants have the keys to their claimed problem in their own

pockets; the Court should disregard their self-created crisis.

Indeed, Defendants’ sense of urgency with respect to their deadline is a sudden shift in

position. As recently as last week, Defendant Echostar asked the Department of Justice to slow

new-found sense of urgency could even be substantially driven by jockeying for position

concerning the transaction’s $600 million “break-up fee” that can be evaded by a claim that one

party has not used “best efforts.”3 As one market analyst observed, “Both parties are obliged to

go through this kabuki dance of putting a full-court press on to get this deal done.”4 Wise

judicial policy suggests caution: if courts were to permit themselves to be rushed by merging

firms’ self-created crises, then firms planning antitrust-problematic mergers would have an

incentive to create transactions with artificial deadlines in order to obtain abbreviated review.

B. There Is No Crisis

Moreover, Defendants’ claimed sense of urgency is based on an unrealistic premise. This

transaction cannot be completed by the Defendants’ self-imposed deadline -- regardless of what

this Court does -- because they need Federal Communications Commission (FCC) approval to

complete their transaction. But they do not have FCC approval and are unlikely to obtain it any

2 Letter of Robert Silver, Esq. to Assistant Attorney General Charles James, Oct. 30,2002. 3 See Demetri Sevastopulo, Hughes and EchoStar may contest block on $ 19 bn tie-up,FIN. TIMES, Oct. 31, 2002, available in 2002 WL 102373033 (“In weighing whether to challengethe ruling, EchoStar and Hughes will have to consider the terms of their contract, which requiresboth sides to do their utmost to win approval for the deal. If Hughes shows any signs ofwavering, it could allow Mr. Ergen [Echostar CEO] to challenge the $600 million break-up feehe has agreed to pay if the merger is blocked. Most observers expect Mr. Ergen to challenge thefee . . . .”); Penelope Patsuris, Ergen-nomics: Fighting the Breakup Fee, (visited Nov. 1, 2002)<http://www.forbes.com/2002/11/01/cx_pp_1101echostar.html> (“. . . if [Hughes] fails to devoteits best efforts to [pursuing the merger], according to the contract, EchoStar would be off thehook for the $600 million . . . . EchoStar already may have a shot at not paying out at least $300million of the fee, which was tied to DirecTV’s cooperation. . . . ‘As long as he [Ergen] fights,he doesn’t have to pay the breakup fee.’”). 4 Robert Gehrke, U.S. Sues to Block Satellite Merger, AP Online, Oct. 31, 2002 availablein 2002 WL 102133568.time soon, if ever. The FCC ordered a hearing under its regulatory authority5 because it found,

“based on the record evidence, that there is a significant likelihood that the proposed merger will

shortly after September 11, 2001) that was operating in bankruptcy, threatened with the loss of

personnel, and forcing companies to make critical choices during this period about where to get

these services. In this case, there is no business failure,9 no externally-imposed deadline from

the bankruptcy process, no inability to provide service, no imminent loss of substantial value to

the DirecTV business, and no critical infrastructure ramifications in the short term. Indeed, even

Defendants’ proposed schedule indicates that they recognize that this matter is significantly more

complex than SunGard; they propose ten days of trial testimony instead of one; eighteen

witnesses instead of three.10

8 See United States v. SunGard Data Systems, Inc., 172 F. Supp. 2d 172 (D.D.C. 2001).In Sungard, the acquired company was in bankruptcy and it was undisputed that the competitivesignificance of the assets at issue were under serious threat. The single plaintiff (the UnitedStates) and defendants consequently agreed on an extraordinarily abbreviated schedule. TheSunGard merger was a $825 million transaction; this merger is 20 times larger at $18 billion,which may make it the largest merger transaction ever litigated, and it raises vastly morecomplex issues. 9 Hughes Third Quarter 2002 Results Driven By Continued Strong DIRECTV U.S.Financial Performance, Hughes Electronics Corporation Press Release, Oct. 14, 2002)<http://www.hughes.com/ir/releases/2002_results/q3_2002/default.xml>. 10 What SunGard does teach is that Plaintiff United States will agree to a hasty schedule,where the need is real. Here the need is not real. Additionally, SunGard displays what atremendous burden it is to proceed so hastily. The defendants ought to have a significant andvalid reason (not a self-imposed one) before they ask that the Court inconvenience itself to sucha great extent on their behalf.D. Pre-filing Investigation

Defendants claim that Plaintiffs have had a year-long pre-filing investigation of the

merger, and thus that little pretrial discovery should be allowed. In fact, however, the

significance of the pre-filing investigation is overstated because it has been marked by

Defendants reached a merger agreement October 28, 2001, and they knew that serious

antitrust issues were raised. Yet they followed a desultory course of responding to investigative

requests. Defendants received a standard statutory “second request” for information and

documents11 on December 17, 2001. The average recipient of such a second request in 2001-02

took 54 days to comply. Defendants, however, took 308 days to comply -- until October 25,

2002. Indeed, after 54 days had passed, Defendants had produced only 10 of an eventual 1600

boxes of documents.12 Defendant Echostar had produced none.13

11 Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, 15 U.S.C. § 18a,mergers of a certain size require notification and observation of certain waiting periods. TheDepartment of Justice may request additional information, which tolls the waiting period untilthe merging parties have complied with the request. Thus if Defendants were in a rush tocomplete their transaction, they had a strong incentive to comply with the second requestquickly. 12 In addition, despite Defendants’ claims of an unprecedented volume of material andcooperation, there was nothing at all unusual about the volume of material produced or thecooperation given for a merger of this size -- except for the slow pace at which it was produced. 13 Moreover, Defendants’ failure to expeditiously pursue this merger is illustrated by theiroverbroad and careless treatment of privilege issues: they withheld some 85,000 relevantdocuments on claims of privilege, many patently improper (e.g., a letter from the Department ofJustice to defendant Hughes; a letter from Echostar copied to Senators Hollings and McCain andfour Congressmen; a DirecTV copy of a letter from two Senators to FCC Chairman MichaelPowell; an e-mail sent to someone identified on Echostar’s privilege log as “former Channel 2news anchor”). Defendants already have been forced to produce thousands of such documents asa result of our review. And there are hundreds more such documents for which we expect thatwe will have to seek the assistance of a magistrate judge (or the Court) to rule that thosedocuments should have been produced. Then we will need to review those documents, and Defendants claim that various synergies and efficiencies would result from the

transaction, but the information they have provided on this subject has been a moving target.

Despite repeated requests from Plaintiff United States, Defendants did not provide their initial

explanation of synergies until June 20, 2002. When Plaintiffs sought backup for some of the

claims and assertions, Defendants provided it only in August 2002, changing many of their

estimates, explanations, and support for their claims. 14

Moreover, while the pre-filing investigation allows the United States to propose an

aggressive seven-month schedule, it is no substitute for the ordinary pre-trial processes. Pre-

complaint discovery designed to determine whether a case should be filed is not the same as

finds considerable merit in the [agency]’s contention that once it has completed its investigation

and filed suit, it is entitled to review its investigation and avail itself of its discovery rights in

order to prepare its case for trial. . . . Once the complaint has been filed and the defendants have

answered, the issues requiring resolution have been clarified, and all parties must be afforded the

opportunity to conduct discovery and prepare for trial with those issues in mind.”). 15

Defendants have signaled that they intend to defend the case substantially on the grounds

a partial divestiture remedy that they intend to propose -- but which has not even been finalized

follow up with deposition questioning as to the most important of those documents.

14 Defendants presented their “model” in a document dated June 20, 2002, a presentationJune 24, 2002, and a backup document dated Aug. 14, 2002. 15 Interrogatories provide another illustration of how unrealistic is Defendants’extraordinarily abbreviated schedule. Defendants’ proposed schedule would allow at most aweek for interrogatories. Yet, during the pre-filing investigation, it took them over three monthsto answer interrogatories, presumably at a time when it was in their own interest to movequickly.yet. Moreover, the proposed remedy, to the extent it has been revealed to us, creates new

anticompetitive problems itself that must be considered. We also anticipate that Defendants will

rely on claimed synergies/efficiencies.16 Both are complicated issues, on which Defendants

carry the burden, and as to which Plaintiffs have had limited pre-complaint discovery.

In addition, Defendants’ proposed schedule places substantial burdens on third parties as

well as the parties to the lawsuit. It is unavoidable to place some burdens on third parties, but

the more abbreviated the schedule, the more significant the burden placed on third parties.

E. Significant Harm to Consumers Is At Issue

Defendants claim that the transaction will bring benefits to consumers, in essence

claiming that they are likely to prevail at trial on the merits, and urge this as a reason for

abbreviating the schedule. Defendants’ arguments face a steep uphill climb; they have so far

failed to convince the FCC, which voted 4-0 not to approve the necessary license transfers. The

proposed merger threatens tens of millions of consumers with monopoly or near-monopoly. As

the Court of Appeals for this Circuit said in FTC v. H.J. Heinz Co., 246 F.3d 708, 720-21 (D.C.

merger] require, in rebuttal, proof of extraordinary efficiencies . . . . See . . . Horizontal Merger Guidelines, supra, § 4 (stating that "[e]fficiencies almost never justify a merger to monopoly or near-monopoly") . . . . Moreover, given the high concentration levels, the court must undertake a rigorous analysis of the kinds of efficiencies being urged by the parties in order to ensure that those "efficiencies" represent more than mere speculation and promises about post-merger behavior.

16 For example, Defendants’ synergies “models” contain over 1300 line items. Moreover,late in October, 2002, Defendants presented a suggestion of a small, partial divestiture as a“remedy” for the anticompetitive harm of the transaction. Plaintiffs received a description ofthis divestiture plan October 22, 2002, and had meetings to elaborate it as recently as October 28and 29, 2002. Defendants admitted in a “white paper” submitted October 21, 2002 that they hadnot even recalculated efficiencies claims to reflect the effect of their proposed “fix.”Defendants’ merger deserves “rigorous analysis,” not the extraordinary rush to judgment that